Officer of failed bank backs lawfirm against FDIC

Stephen Putnam says he waived conflict of interest, knew land wasn't part of the deal

By JOSH SALMAN

The Federal Deposit Insurance Corp. might have expected executives of the failed First Priority Bank to bolster its case against a prominent Sarasota law firm and one of its top partners.

Instead, as the agency -- now First Priority's receiver -- continued its lawsuit against Icard Merrill and partner Robert Messick in federal court Tuesday, it appeared that officers of the defunct Bradenton bank are helping the defense.

In what is expected to be a common refrain among former bank leaders, First Priority vice president and chief lending officer Stephen Putnam said the agency's claims of malpractice and breach of fiduciary duty against the firm are overblown.

He maintained, too, that the bank was aware Messick represented both First Priority and another lender involved with a real estate developer -- another Messick client -- who was aiming to get a loan for a Manatee County residential community.

"I trusted him," Putnam said of Messick. "We had worked together for nearly 20 years."

Putnam, who evaluated whether to lend developer and Messick client Mark Brivik $5.3 million, added that he understood fully an option to add 25 acres of waterfront land to the community did not exist. The additional land would have greatly increased the value of the bank's collateral and offset the risk of the loan to Brivik. Brivik defaulted on the First Priority loan 18 months after securing it.

The FDIC, which is seeking $4.6 million in damages because of the default, argues that documents show the bank was deceived about the crucial 25-acre parcel.

But Putnam testified the bank's lending committee knew the additional land was not available and was willing to move forward without it.

"Messick told me there was no option property before the loan was approved," Putnam testified.

Brivik wanted the First Priority loan to pay off other debt of $4.3 million and start development on a 97-home community called River Meadows.

FDIC attorneys maintain that Messick failed to advise First Priority's board that he was also representing Brivik and the other lender, which resulted in a conflict of interest and prevented him from providing unbiased counsel to the bank. An agency lawsuit also alleges that Messick failed to tell the bank's board that the option to buy the 25-acre tract would not be forthcoming.

But Putnam countered Tuesday that he knew Messick represented Brivik when he asked the lawyer to represent the bank in the transaction. He also testified he personally waived any conflict of interest on behalf of the bank, even though he was not authorized to do so.

Putnam added there was "no question" in his mind the bank's loan would apply only to 22 acres Brivik had already acquired. The 25-acre waterfront parcel would have contained another 60 homes.

The FDIC contends Putnam and other First Priority bankers considered the additional 25-acre tract as primary collateral.

The property was described as an option parcel in both the lender's initial credit assessment report and in a hand-written sketch of the site that was included in official documents.

"If the 25-acre option parcel never existed, why does the credit assessment report have it listed under the collateral information?" Al Perez, a Coral Gables attorney representing the FDIC, asked Putnam while pointing to the documents. "It says it right here."

Messick's defense team argued the document's wording was a clerical error.

Dennis Waggoner, a Tampa attorney representing Messick and Icard Merrill, also noted no purchase price -- a critical component -- was ever agreed upon regarding the 25 acres. Waggoner added that the bank sought appraisals and environmental studies, which would be required for any loan, for only Brivik's 22-acre tract -- a sign the slightly larger parcel was not part of the deal.

The 25 acres also was not mentioned in the bank's commitment letter issued shortly after the loan was approved.

Messick himself is expected to testify today, and the trial is likely to last the balance of the week. Both sides also are expected to present expert witnesses who will testify on whether Messick had a conflict representing the various parties.

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